Report: 160 commercial advanced biofuel plants under development

Environmental Entrepreneurs (E2) has released a new report that predicts projected growth in advanced biofuel production capacity will be sufficient to meet both the federal renewable fuels standard (RFS) and California’s low carbon fuel standard (LCFS) through 2016. The report, titled “Advanced Biofuel Market Report 2013,” is the third annual report of its kind published by E2. The analysis convers only biofuels that achieve a 50 percent or greater reduction in carbon intensity relative to petroleum gasoline using direct and indirect effects as measured by the California Air Resources Board.

According to the report, advanced biofuel capacity in the U.S. and Canada expanded from 490 million gallons of gasoline equivalent (gge) in 2012 to 1 billion gge this year. As part of its analysis, E2 has identified 159 companies active in the production of advanced biofuels, and 93 companies that provide products and services to the supply chain.

The report notes that the number of companies focused on advanced biofuel production has remained relatively stable since 2011, The 159 companies active in the space this year are estimated to have at least 160 commercial-scale projects complete, under construction or in the advanced planning stages, with 138 of those facilities currently complete. The report specifies that the majority of these plants produce biodiesel. However, five completed commercial facilities produce ethanol and drop-in biofuels. In addition, E2 has identified 13 advanced biofuel demonstration facilities in the U.S. and Canada.

E2 projects that between 159 and 198 companies will be active in advanced biofuel production from 2013 through 2016, including 116 to 134 in the biodiesel space, 16 to 33 in the drop-in sector, 26 to 28 in ethanol, and one to three in other fuels, such as butanol. Total capacity for all fuel categories is expected to range from 1.02 billion to 1.06 billon gge this year, to between 1.63 billion and 2.19 billion gge in 2016.

The report predicts production capacity for drop-in biofuels will expand faster than cellulosic capacity, with drop-in capacity expected to reach 417.4 million gge by 2016. Cellulosic ethanol capacity at that time is expected to reach only 207.8 million gge. In its report, E2 attributes part of the growth in drop-in fuels to petroleum industry preference.

According to E2, advanced biofuel companies currently support approximately 4,500 direct full-time jobs. That number is expected to expand to approximately 8,000 by 2016. The supply chain could support an additional 20,300 jobs by 2016, with 33,000 more temporary construction jobs.

Regarding financing, the report notes that $4.85 billion in private equity investments have been tracked in active biofuel-related projects in North America since2007, with $3 billion of that invested in biofuel producers and $1.45 billion invested in companies in the value chain. Since the 2012 report, E2 has tracked $1.45 billion in new advanced biofuel investments. E2’s report also discusses initial public offerings and public funding mechanisms.

The analysis also addresses two categories of factors that drive demand for advanced biofuels: public policy and consumer demand. While the RFS is the most important biofuel policy in the U.S., E2 notes the policy has been fraught with contention over the past year. The LCFS is currently facing implementation delays due to litigation, however, court decisions have largely upheld the program. Under the category of consumer-driven demand, E2 highlights military demand, the aviation sector, and the price volatility of oil.

In the report, E2 concludes that capital availability remains the greatest challenge to the commercialization of advanced biofuel projects, and that public funding continues to play a crucial role in industry development. Regulatory uncertainty and feedstock availability and pricing are also highlighted as challenges.